Visa, the global payment giant managing annual transactions worth $16 trillion, is making strides to incorporate decentralized finance (DeFi) into its operations. In its newly released report, “Stablecoins Beyond Payments: The Onchain Lending Opportunity,” Visa reframes DeFi as “onchain finance,” establishing a novel terminology for institutional capital. The company’s strategic approach aims to provide financial institutions with secure integration into blockchain-based credit markets post-GENIUS legislation.
Onchain Finance: The Next Frontier for Institutional Liquidity
Visa envisions banks and private credit funds acting as liquidity providers within blockchain credit protocols. To ensure reliability and security throughout this transition, Visa offers data, compliance, and infrastructure support. This strategic backing aims to encourage institutional players to explore blockchain-based lending systems through Visa’s esteemed global reputation.
Highlighting a pivotal shift from experimental cryptocurrency projects to an institutional infrastructure provider, the report notes that over $670 billion has been loaned through stablecoins since 2020. As of mid-2020, transaction volumes reached record heights. Visa argues this growth positions stablecoins not merely as trading instruments but as fundamental pillars for automated credit markets.
Visa’s Strategic Model: Infrastructure, Not Cryptocurrency
Visa’s strategy deliberately excludes launching its own cryptocurrency or directly funding credits. Instead, Visa identifies itself as a technology provider free from associated risks. The company aims to integrate programmable credits into traditional finance using APIs, analytical systems, and instant settlement infrastructure.
Three illustrative cases highlighted include Morpho, which bridges corporate wallets and exchanges like Coinbase, Ledger, and Bitpanda to provide collateralized USDC loans. Credit Coop, working in direct collaboration with Visa, restructures trade receivables via smart contracts. Meanwhile, Huma Finance offers supply chain financing through stablecoin-based working capital loans, delivering annual double-digit returns.
Visa’s approach mirrors its traditional card payment business strategy, focusing on owning infrastructure. Visa does not issue cryptocurrencies but seeks to be a conduit for data and transactions between conventional finance and DeFi systems.
